Global Chocolate Confectionery Overview: Challenges, Opportunities and Risks

August 2016

Substitution for other snacks, negative health perceptions and a slowdown in growth in promising markets threatens to undermine the global chocolate confectionery market. With more snacks now available, chocolate is losing its dominant position as the default snack for many. This threat brings about opportunities that may cause a permanent shift in how chocolate is consumed around the world, with the product becoming more visible in the markets of Asia while becoming less of an impulse choice

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Chocolate faces a tipping point

This is an exciting time for the chocolate confectionery market, but only as a result of the difficulties it faces -the perpetual slowdown in the West is now being imitated in some markets such as China. Companies are slowly dealing with the challenges they face, but can expect a low growth environment for some time to come.

Retail environment will polarise in the next five years

Specialist chocolate stores are evolving from a marketing gimmick to a legitimate source of sales for many manufacturers. Ferrero and Lindt have been particularly proactive in pushing their retail divisions, with the latter’s shop turnover increasing by 20% in 2015. Alongside this, more niche chocolate products will be available in high-spend chocolate markets, leading to a more fragmented competitive landscape.

Greater competition from new snacks provides existential threat to chocolate in the West

Negative health connotations continue to undermine chocolate sales in Western Europe and North America. There are a wealth of new snacks such as energy bars, nuts and meat snacks, which have managed to attract audiences looking for healthy alternatives to confectionery. These products are here to stay and will make it difficult for chocolate to grow, unless it can tap into local health trends.

Chocolate will continue to have a limited audience in the Middle East and Asia

Relative to other snacks, chocolate is beyond the price range of many in markets such as India, China and the Middle East. This will not change any time soon. Players with a small presence will need to target second-and third-tier cities, where newly-formed middle classes have developed, in order to gain market share. That said, targeting these cities is fraught with risks, as witnessed by Hershey’s acquisition of Shanghai Golden Monkey.

Introduction

Scope
Key findings
Tipping point in global chocolate market

Global Overview

Chocolate remains the snack of the wealthy

Global overview

Volume slowdown in China and Brazil; West also struggles
Consumption slowdown but opportunities in Middle East and Asia
Tablets and countlines remain most lucrative chocolate products
Tablet sales show the West’s increasingly adventurous palate
Premium the name of the game in the West
Affordability a key issue in fast-growing chocolate markets
Mondelez the leading company in more markets…
…but Mars’ greater presence in more markets gives it global lead
Might the spectre of Brexit significantly impact sales of chocolate?

Challenges in the Global Market

Cocoa price increases place pressure on unit prices
Supply chain issues present long-term problems

Challenges in the global market

Retail environment growing more challenging
D iscounters could be disruptive force in core chocolate markets
Are chocolate buyers living a little less impulsively?
Mars, Nestlé and Hershey the most exposed to an impulse decline
Slowdown in Brazil and Russia; potential for further decline in West
Taxation: Another potential obstacle to chocolate’s growth?

Solutions

Stepping away from chocolate
Branded stores: More than a marketing gimmick?
Could the premium segment become too saturated?
Will heat resistance be the battleground for chocolate?
Re-size and reformulate: Manufacturers adapt to price pressures

Outlook

New chocolate consumers the focus in high-growth markets
Early birds will catch the worm in secondary and tertiary cities

OUTLOOK

Large manufacturers must increase chocolate’s appeal

Appendix: Competitor Analytics

Competitor Analytics tool
Overview
Competitors
Market Overlap
Treemap
Overlap Matrices

Appendix: Industry Forecast Model

About Euromonitor International’s Industry Forecast Model
Soft drivers and the Industry Forecast Model
Growth decomposition explained
Significance and applications for growth decomposition
Key applications for Industry Forecast Models
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